Why start with small business revenue streams? Because one total revenue number hides the answer to the question every owner needs to ask: which parts of my business actually make me money?
Remember the greenhouse owner from the first post? He knew his total sales. He just couldn’t see which crops earned them. Total revenue works the same way in any business. However, it only tells you how much came in, but not where it came from or what it cost to earn.
Separating your small business revenue streams gives you three things. First, it shows you where your money actually comes from. Second, it lets you match the right costs to each stream in the next pillars. Third, it shows you which streams deserve more of your time and which ones quietly drain it.
Picture our roofer. Say a shingle replacement, a metal roof and a leak repair all land in one “Sales” account. He sees one big number. As a result, he can’t tell which job pays best, so he can’t decide which to chase, which to price higher or which to drop. Likewise, our photographer has the same problem if weddings, portraits and album sales share one bucket.
Every other pillar builds on this one. Direct costs, price points and your forecast all attach to a specific revenue stream. So if you skip this step, the rest of the Cashflow Canvas has nothing to attach to.
Cash flow is the timing of the money moving in and out of your bank account. Revenue streams matter here because each one brings money in on its own schedule. A roof usually pays when the job is complete. A wedding pays a deposit at booking, months before the work, and the balance comes closer to the event. Some streams peak in summer, while others hold steady all year. For example, a roofer’s busiest months can bring in over twice the average.
You can’t plan for those differences if all your income sits in one lump. So, when you split your revenue into streams, you also start to see when your cash arrives.
The Cashflow Canvas is a framework that breaks your business into 8 building blocks. Together, they show you what you earn, what it costs to deliver, what to charge and how much cash you need. Revenue streams are the first block. The other seven are:
Each post in this series covers one, so you can take them in order. To find out more about the Cashflow Canvas, click here.
To keep things concrete, we’ll follow two example businesses through the whole series: a roofing contractor and a wedding photographer. One is hands-on and materials-heavy. The other is service-based. I made up every number for teaching, but the numbers tie together from one post to the next.
Revenue is the money customers pay you, before any costs come out. In other words, it’s your sales. A revenue stream is one way your business earns that money. For a roofer, that might look like:
How do you decide what counts as a separate stream? Use this rule. Two things are separate streams when their costs, their prices or their customers differ. For example, an asphalt roof and a metal roof use different materials and take different labour, so they are separate streams. A leak repair sells at a different price to a different kind of customer, so it gets its own stream too.
We identify streams so we can assign the right costs to each one. Those costs include materials, labour and more. The next few pillars build toward exactly that.
First, sit down and list everything your customers buy from you. Don’t filter yet. Just get it all down.
For our roofer, for example, that brainstorm might look like:
For our photographer, however, it might look like:
Finally, keep listing until you have every way you charge your clients.
Next, put numbers on your list. For each item, find two things: the price you charge per job, and the number of jobs you did over the past year. Multiply them and you have the annual revenue for that stream.
First, start with your historical numbers. You might need to pull in your bookkeeper here, because one general “Sales” account makes those numbers hard to find. Separate revenue accounts (say, asphalt, metal and cedar) show you at a glance where your income really comes from. However, a “Sales” bucket tells you very little.
Leave out GST when you add up revenue. You collect GST on behalf of the government, so it isn’t your money. Also, if you’re a brand-new business with no history, estimate instead. A reasonable best guess works fine for now.
If your books already use separate revenue accounts, skip ahead to Step 3. If everything sits in one account, here are four ways to reconstruct the numbers:
At this point, we’re not looking for perfection. Instead, we just need reasonable numbers to work with. If this took some time, check in with your bookkeeper. Then, together, you can set up your tracking so this information is easy to find. You’ll need it often as you actively manage your cash flow.
Now, rank your streams from the most revenue to the least. For instance, a pattern shows up in most businesses: a few streams bring in most of the money, often around 80%. So pick the top 3. You’ll be well on your way to mastering your cash flow.
Why only 3? Good question. Each stream you pick gets its own Direct Costs, Price Points and Assumptions as you work through the Cashflow Canvas. That’s a lot of work. Eventually, once you’ve mastered the technique, you can get more granular on each service you offer.
Here’s how it looks for our roofer’s main stream and our photographer’s:
| Business | Revenue stream | Price per job | Jobs per year | Annual revenue |
| Roofer | Asphalt shingle installation | $15,000 | 40 | $600,000 |
| Photographer | Weddings | $3,500 | 39 | $136,500 |
Overall, each row follows the same math: price per job times jobs per year. For our roofer, we’ll choose asphalt shingle installation, metal roof installation and leak repair as the top 3. Likewise, for our photographer, we’ll choose weddings, portrait sessions, and albums and prints. You would fill in the remaining rows the same way.
Before you move on, here’s what you should have:
Glinda, the AI-powered Cashflow Canvas assistant, can help you focus on the key revenue streams driving most of your business. If you want to try out Glinda for free, click here.
Knowing your small business revenue streams is only half the picture. Therefore, next, you need to know what each stream costs. That’s Pillar 2, Direct Costs.
Why start with small business revenue streams? Because one total revenue number hides the answer to the question every owner needs to ask: which parts of my business actually make me money? Remember the greenhouse owner from the first post? He knew his total sales. He...
0 Comments